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Forwards recap: June power notches gains with gas futures


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Forwards recap: June power notches gains with gas futures

Trackingan uptrend in natural gas futures, the price of power for June delivery movedmostly higher in the week ended May 6 as expectations for warmer weather also helped supportfront-month power value.

The Junenatural gas contract began the week with a sharp loss of 13.6 cents to settleat $2.042/MMBtu onMay 2 but spent three of the following four sessions recouping those losses,adding 4.4 cents on May 3 and 5.5 cents on May 4 to settlements of and , respectively.

Whilethe report of asurprisingly large storage injection helped knock the June contract 6.5 centslower to $2.076/MMBtuon May 5, the gas futures market was once again ticking higher to end the weekwith a 2.5-cent gain at $2.101/MMBtu.

Acrossthe U.S. the uptrend in gas prices offered support to term power trades butwith gains in the East kept in check relative to other regions.

NewEngland was one of the only markets in the country to see lower front-monthvalue as more than $2 in gains through midweek were erased and reversed in thefinal two sessions. June power at the NEPOOL Mass hub climbed from the low $30sto above $35 by midweek then back down into the low $30s for a weekly loss ofless than $1, or about 2%. By contrast, June deals at PJM West spent most ofthe week just above the $35-mark to close the week with a gain of less than $1,or just 1%.

Gainswere more impressive elsewhere in the country and exceeded $2 in parts of the Midwest,where the June product at MISO Indiana hub ended the week in the low $30s, up8% from an average of less than $29 on May 2. PJM markets in the Midwest,however, showed less gusto. June deals at the Northern Illinois hub were up 4%,or just more than $1, to end the week at $31.30 and front-month deals at theAEP-Dayton market added just 2%, or less than $1, to end the week near $34.

ERCOTforward trades also posted impressive gains, as June deals at ERCOT North moved10%, or more than $2.50, higher throughout the week, from an average of justabove $25 on May 2 to near $28 by May 6.

However,the biggest gains were seen in the West, where June deals jumped 16% at SouthPath-15 and 18% at Mid-Columbia. The front-month product at SP-15 began theweek below $25 and ended above $28 while, finding support from for a decline incheap hydropower into June, front-month trades at Mid-C ran from the high teenson May 2 to near $21 by May 6.

Market pricesand included industry data are current as of the time of publication and aresubject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities Pages.